European countries must be prepared to absorb the impact of economic sanctions on Russia in order to encourage president Vladimir Putin's regime to behave "properly" in Ukraine, Foreign Secretary Philip Hammond has said.

Mr Hammond was speaking after the European Union and US agreed new measures targeting sectors of the Russian economy in the wake of the downing of Malaysia Airlines flight MH17, which has been blamed on Moscow-backed rebels in Ukraine.

The new EU sanctions include an arms embargo, a ban on the sale of dual use and sensitive technologies, and a ban on the sale of bonds and equities by state-owned Russian banks in European capital markets.

Eight more officials - including four members of Mr Putin's inner circle - are also expected to be subjected to asset bans and travel freezes.

The White House swiftly followed up the EU's announcement with a fresh round of sanctions of its own, targeting three Russian banks.

Mr Hammond told Sky News that the measures had been "d esigned to maximise the impact on Russia and minimise the impact on EU economies".

But he added: "Y ou can't make an omelette without breaking eggs, and if we want to impose economic pain on Russia in order to try to encourage it to behave properly in eastern Ukraine and to give access to the crash site, then we have to be prepared to take these measures."

US president Barack Obama said: "Today Russia is once again isolating itself from the international community, setting back decades of genuine progress. It does not have to be this way. This a choice Russia and president Putin has made."

Prime Minister David Cameron said the new sanctions should send a message to Mr Putin that his behaviour in Ukraine was unacceptable" and Russia could expect "tough action" from the international community until it changed course.

The measures were agreed as world aviation chiefs set up a "senior level" international task force to deal with the threat to passenger planes following the downing of flight MH17.

A top-level safety conference involving more than 190 nations will also take place in February under the auspices of the International Civil Aviation Organisation (ICAO).

Following a meeting of global aviation bodies in Montreal, ICAO's secretary general Raymond Benjamin said all the aviation bodies "strongly condemned the use of weapons against the civilian aircraft".

European Council president Herman van Rompuy said the new EU sanctions had been imposed after Russia ignored calls to seek a peaceful resolution to the crisis in Ukraine, with arms and fighters continuing to flow across the border in support of the pro-Moscow separatist rebels.

"It is meant as a strong warning: illegal annexation of territory and deliberate destabilisation of a neighbouring sovereign country cannot be accepted in 21st century Europe," he said.

"Furthermore, when the violence created spirals out of control and leads to the killing of almost 300 innocent civilians in their flight from the Netherlands to Malaysia, the situation requires an urgent and determined response."

Meanwhile, US secretary of state John Kerry accused separatist rebels in eastern Ukraine of showing "an appalling disrespect for human decency" in carrying on fighting close to the site where MH17 crashed after apparently being shot out of the sky by a surface-to-air missile.

The fact that not all the remains of the 298 victims of the disaster had yet been recovered had placed "an unsupportable burden on families", who "clearly deserve a thorough, international investigation", Mr Kerry said in a Washington DC press conference.

Mr Cameron met families of Britons killed in the MH17 crash at 10 Downing Street yesterday, as the parents of one victim said they were "angry and frustrated" his body had not yet been returned.

Barry Sweeney, whose 28-year-old son Liam died in the July 17 crash, said: " We basically asked Mr Cameron just to help. The talking I suppose has got to stop and the doing has got to be done.

"I feel very angry and frustrated. It would be nice if they could just stop fighting for a little bit so that we could get all our boys and girls home."

Signs were emerging of concern in the City of London about the possible blowback sanctions on Russia could inflict on the UK economy.

Energy giant BP - which owns a 20% stake in Russian oil firm Rosneft - warned that further international sanctions could have a "material adverse impact" on the company's business in Russia and its own financial position.

Shadow chancellor Ed Balls said the sanctions could have an impact not only on British companies in sectors like oil, but also on the London property market, where Russian millionaires have been keen purchasers of luxury homes.

But he said the EU measures were "absolutely necessary and right".

Mr Balls told Sky News: "It's important that the European Union rises to the challenge, and I think it's now beginning to, working with our American partners.

"You can't have a situation where our global economy, peace and stability in Europe, is being destabilised by the kind of irresponsible and idiosyncratic go-it-alone actions we've seen from Mr Putin in Russia.

"The world has got to stand up and say 'We are not going to go back to those days. The way in which things have happened in Ukraine has been so badly wrong that we need to make a stand'."

He added: "I think these sanctions will be tough. We need to keep an eye on what is happening in our economies. Clearly, BP are saying today it will affect them, but it's also going to affect lots of Russian oligarchs who will find it harder to bring their money to London to invest in houses here.

"It's important that Mr Putin understands there are consequences when he does some of the things he has done."

Asked how hard the sanctions could hit the UK economy, Business Secretary Vince Cable told Sky News: "We are being realistic and accepting that sanctions are not painless.

"But the thinking behind it is that the measures have been very carefully chosen so they have the maximum impact on Russia, with the aiming of changing their behaviour and stopping them doing what they are doing. But also we have been very clear that we need to move, with our allies, with the rest of the European Union and the United States.

"It's right that Britain makes a contribution, but we are not going out on a limb. We are doing it with the European Union and others."